The real reason Scott Morrison is playing down the budget


Phil Lewis, University of Canberra

Despite the Treasurer, Scott Morrison, describing the federal budget as “not a centrepiece”, it has always been regarded as just that – the centrepiece of fiscal policy in Australia. The Conversation

Any changes in federal taxes and expenditure are intended to achieve good outcomes for Australia’s economy, such as low unemployment, price stability and economic growth. In economic terms, government spending should increase and tax receipts fall during downturns in the economy, and the opposite should happen when the economy is booming. This is how the government is able to balance out cycles in spending by the private sector.

Importantly, the budget is made up of more targeted fiscal policies (referred to as “discretionary” by economists) as opposed to automatic processes (referred to as “stabilisers”). The distinction between the two is important.

Automatic processes refer to when government taxes and expenditure generally increase and decrease with the business cycle. They are automatic because these changes in taxes and spending occur without the government having to do anything.

For example, when the economy is growing strongly, employment increases and unemployment falls. This results in unemployment benefit payments to workers, who were previously unemployed, automatically decreasing.

Also, when the economy is expanding, expenditure and incomes for workers and for businesses rise and the amount the government collects in taxes increases. When economic growth slows or becomes negative, the opposite occurs: the amount the government collects in taxes will fall and expenditure on unemployment benefits will rise.

With more targeted fiscal polices, the government takes actions to change spending or taxes. But although the budget is the centrepiece, it is not a very effective means of managing the economy.

The government and parliament have to agree on changes in fiscal policy. The treasurer initiates a change in fiscal policy through the budget in May each year. This must be passed by both houses of federal parliament, which can take many months (some measures have been blocked by the Senate for much longer).

Even after a change in fiscal policy has been approved, it takes time to implement. Suppose, for example, that parliament agrees to increase spending on infrastructure to create “jobs and growth”. It will probably take several months or more to prepare detailed plans for construction projects.

State or territory governments will then ask for bids from private construction companies. Once the winning bidders have been selected, they will usually need time to organise resources, including hiring labour, in order to begin the project.

Only then will significant amounts of spending actually take place. This delay may well push the spending beyond the end of the low point in the economy that the spending was intended to counteract.

Indeed, if the economy has recovered by the time the construction and related jobs come on board then the government spending will mean a shortage of labour in other parts of the economy and few or no new jobs (unless shortages are filled through migration).

Because the budget is a very difficult means of carrying out targeted fiscal policy, it’s become more important as a centrepiece for the government to set out its broad economic strategy – its goals and how to achieve them. But it seems that both major parties are failing even with this goal.

In recent years the view of most economists has been the need to reduce the structural budget deficit and the level of government debt. In 2016-17 net government debt stood at A$326 billion, and was forecast in last year’s budget to increase until at least 2018-19. There is also quite widespread acceptance that our tax system is in need of reform.

There are two glaring omissions from recent federal budgets of both major parties: any plan to significantly reduce the deficit any time soon, and any proposal to embark on meaningful tax reform.

The Rudd and Gillard governments will be remembered for Wayne Swan’s budgets, which consisted of new spending initiatives including the National Disability Insurance Scheme, the National Broadband Network, and the Gonski education funding reforms, but featured no plan to raise revenues to fund them and manage the huge subsequent debts.

Joe Hockey and Tony Abbott’s attempt in the 2014 budget to address government deficit and debt was regarded as a disaster, resulting in the demise of both as leading politicians. Morrison and Prime Minister Malcolm Turnbull are desperate not to make the same mistake, and this severely limits their capacity to do anything meaningful to tackle the deficit and debt issue.

The major problem with successive budgets is that they have not provided a cogent strategy for improving living standards, including addressing inequity for the most disadvantaged Australians, which can only be achieved through economic growth.

Growth entails taking materials, labour and capital to produce goods and services of greater value that people want at prices they are willing to pay. This is best done by the private sector and cannot arise from wasteful government expenditure, accumulating debt or fiddling at the edges with markets, through such things as changes to superannuation or housing finance.

Growth and jobs can only arise from value-adding activities and government policies which facilitate this such as reducing debt, promoting free trade, reducing restrictions on business and labour market reform. This is hard to do and far more difficult than easy options, which explains why we can expect little from the budget to address real reform.

Phil Lewis, Professor of Economics, University of Canberra

This article was originally published on The Conversation. Read the original article.

East Timor, war, coffee and Australia’s debt of honour



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Coffee beans picked from a crop in Timor-Leste.
United Nations Photo, flickr, CC BY

Heather Merle Benbow, University of Melbourne

Australian soldiers have long relied on an East Timorese hospitality epitomised by its coffee. The Conversation

The fond appreciation for the nation’s beans traces back to the second world war, where Dutch and Australian commandos – known collectively as Sparrow Force – engaged in guerrilla warfare against the Japanese in what was then known as Portuguese Timor.

The commandos were only intermittently supplied with army rations. They relied heavily on the assistance of locals to meet their basic needs, as well as scouring the landscape for fruit, nuts, vegetables and wild or feral animals.

The soldiers’ enemy, the Imperial Japanese Army, were also following a principle of “local procurement”, which more often than not meant forced requisition and looting.

A bag of coffee harvested from crops in Timor-Leste.
Janina M Pawelz, Wikimedia Commons

This conflict was contemplated by one Dan O’Connor, of no. 4 Australian Independent Company, over a mug of warm coffee. His musings reveal the central strategic role of food in the Battle of Timor:

As I sipped the hot coffee made from beans grown and roasted by the natives and flavoured in the mug with wild honey, my mind was running over the events of the last few months. […] Lately […] the Japs had become bolder and were moving out from the coast. They burned the villages and stole the food and the women. […] It was only a matter of time before we would have no food at all, […] no hope of survival.

The Japanese and Australians respectively razed villages and destroyed the crops and food stores of the Timor natives, as a means to gain a strategic advantage in the Battle of Timor.

The Timorese also traded with the Australian soldiers, who paid for their food in coins prized mostly for their “ornamental value”. There are stories of “natives” emerging unbidden from the forest bearing bananas, of eating with local Portuguese priests and of Timorese “maidens” clothed only in grass skirts bearing water for the soldiers.

However, the Timorese were sometimes reluctant to sell their food, which was interpreted as unfriendliness in one history of the company.

Then there are accounts of mischievous behaviour towards the Australians by the Timorese. A young boy, for example, who pretended to enjoy eating native “berries” encouraged an Australian soldier to try them:

I tried one, God [it blew] the top of my head off. It was those real hot chillies. He stood there giggling like anything.

Intercultural bonds

Food and drink are often the catalyst for intercultural encounters in wartime. As scholar Katarzyna J. Cwiertka has argued, the cultural meanings of food can be amplified in war:

…it can become a weapon, an embodiment of the enemy, but also a token of hope, a soothing relief.

It is for this reason that the debt of gratitude to the Timorese is remembered so strongly in the Australian Army.

As O’Connor recalled, the soldiers formed strong bonds with their native “helpers”, dubbed “criados”:

Without them life would not have been possible. Each soldier had one as his personal servant, friend and general assistant. […] The criados provided food, washed clothes, carried equipment and did every other task required of them. They did it in a happy, cheerful way. They were magnificent.

One Australian soldier, Bill Beattie, expressed deep shame at Australia’s abandonment of the East Timorese following the Indonesian invasion and Portugal’s effective withdrawal in 1975 – a sentiment shared by other returned servicemen and women, even today.

Among those who strongly identify with the Independent Company soldiers is a group of peacekeepers from the 6th Battalion of the Royal Australian Regiment, including Shannon French. He fondly recalls the cups of coffee proffered to his battalion while on a peace-keeping mission in East Timor in 2000, after the independence referendum:

The Timorese villages had been plundered and burnt to the ground. The locals had nothing, but they would come out to greet us with plastic cups. We would stop and they’d give us hot sugary coffee.

It was on a subsequent mission in 2012 that French and fellow soldiers Tom Mahon, Cameron Wheelehen and Tom Potter, decided to help the East Timorese sell their coffee in Australia. In the chaos after the Indonesian invasion, coffee crops in the region of Aileu were allowed to grow wild through the forest. Here, the Robusta and Arabica coffee crops interbred, thus creating the unique Hibrido de Timor blend.

Coffee being processed in Timor-Leste.
Janina M Pawelz, Wikimedia Commons, CC BY

French recalls slashing through the forest while on peacekeeping duties, oblivious to the damage he was doing to the coffee plants – to the peacekeepers, they were indistinguishable from forest undergrowth.

The four later formed the Wild Timor Coffee company. Their mission to source “organic, ethical and direct” traded coffee from the Timor region is an initiative co-founder Mahon called “a debt of honour thing”.

Two cafes have since been opened in Melbourne’s inner north; their walls adorned with pictures of WWII soldiers in Portuguese Timor, and their shelves filled with Timorese cakes made by Ana Saldanha, who fled East Timor in 1975. Their efforts have funded health clinics and education initiatives back in Aileu.

But the extent to which East Timor’s people are served by the cultivation of cash crops such as coffee – which has a notoriously low global price – remains to be seen.

What is clear, though, is that the hospitality of the East Timorese in times of conflict created intercultural bonds with the Australian military that have endured through more than half a turbulent century.

Heather Merle Benbow, Senior lecturer in German and European Studies, University of Melbourne

This article was originally published on The Conversation. Read the original article.

How Dutton comes out of dispute about Manus claim goes to the question of character


Michelle Grattan, University of Canberra

Peter Dutton has put his credibility in the frame by sticking to his claim about the role of an incident involving a young boy in triggering the Manus Island disturbance that saw Papua New Guinea defence personnel fire shots at the detention facility. The Conversation

Dutton’s well-publicised but strongly disputed allegation will be tested by the investigations being done by the PNG defence and police authorities, while Senate estimates in a few weeks should also provide a chance to probe it.

Dutton is a former policeman, which is just one reason why he should be held to the highest standards of accuracy in making a claim.

How Dutton comes out of this dispute about facts is particularly important, because it goes to the character of the conservative Liberal from Queensland who is touted as a possible future leader.

In notable contrast to the obvious tensions between Malcolm Turnbull and Treasurer Scott Morrison, the prime minister and his immigration minister are walking in lockstep. Dutton is at the heart of Turnbull’s attempt to win voters’ support with tougher policies on foreign workers and citizenship.

When Dutton last week was asked on Sky what he knew about the Good Friday violence he said: “There was difficulty, as I understand it, in the community. There was an alleged incident where three asylum seekers were alleged to be leading a local five-year-old boy back toward the facility and there was a lot of angst around that, if you like, within the local PNG community.”

Pressed on why there was this angst, he said: “Well because I think there was concern about why the boy was being led, or for what purpose he was being led away back into the regional processing centre. So I think it is fair to say that the mood had elevated quite quickly. I think some of the local residents were quite angry about this particular incident and another alleged sexual assault.”

But Manus Province police commander David Yapu rejected this version. He told Fairfax the boy, who he said was aged about ten, had been given fruit in the centre about a week before the violence.

“Then Wilson Security had to intervene and get him out from the centre. That had nothing to do with the latest incident involving soldiers,” Yapu said. “The child incident is unrelated.”

Earlier Yapu was reported to have said the soldiers’ drunken rampage was retaliation following a clash between navy personnel and asylum seekers who were playing soccer in the navy base.

When it was put to Dutton on Sunday that what he’d said wasn’t true, he retorted: “It is true. And the briefing that I’ve had is particularly succinct and clear … I can give you the facts in relation to it or you can take the Twitter version.”

Reference to “the Twitter version” was an obvious attempt to denigrate the alternative account. But that alternative came in the form of direct quotes from a local police commander.

Dutton told interviewer Barrie Cassidy that “there are facts that I have that you don’t”. Pressed on the source of his information he said: “I have senior people on the island. We also have obviously significant contacts with the governor and people of Manus.”

Let’s hope that the evidence-gathering speedily produces “the facts”, whether those facts contradict or back Dutton.

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Ministers should not be allowed to slip away from taking responsibility – as former immigration minister Morrison did over his wrong claims against Save the Children personnel. On the other hand, if Dutton is so certain he’s got the right story, he has every interest in seeing the proof out in public to back it.

Meanwhile at the weekend US Vice-President Mike Pence reiterated that the Americans will stick by the deal the Turnbull government did with the Obama administration to take refugees from Manus Island and Nauru. But Pence didn’t miss the opportunity to again register the Trump administration’s unhappiness with the deal. The honouring “doesn’t mean we admire the agreement,” he told his news conference with Turnbull.

Pence cast the honouring in firmly alliance terms: “The decision to go forward I think can rightly be seen as a reflection of the enormous importance of the historic alliance between the United States and Australia,” he said.

“And whatever reservations the president may have about the details of agreements reached by the prior administration, we’ll honour this agreement, out of respect for that enormously important alliance.”

The firm message-behind-the-message seemed clear: don’t forget we’re doing you a big favour.

Newspoll postscipt

Labor leads the Coalition 52-48% in Newspoll, compared with 53-47% three weeks ago. The Coalition’s primary vote remains at 36% in the poll, published in Monday’s Australian, while Labor has slipped from 36% to 35%, and the Greens from 10% to 9%. Pauline Hanson’s One Nation remains at 10%.

Malcolm Turnbull’s net satisfaction has improved from minus 29 points to minus 25; while Bill Shorten’s net satisfaction has gone from minus 22 to minus 20.

https://www.podbean.com/media/player/jw7bg-69e505?from=yiiadmin

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

Pence visit reassures that the US remains committed to the Asia-Pacific


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Mike Pence and Malcolm Turnbull meet at Admiralty House in Sydney.
AAP/Jason Reed

Tony Walker, La Trobe University

Viewed through the lens of a traditional relationship between close allies, all might have seemed well as US Vice-President Mike Pence and Prime Minister Malcolm Turnbull sprinkled emollient words on a media contingent gathered on the lawns of Sydney’s Admiralty House. The Conversation

Ferries traversed Sydney Harbour in the background, yachts tacked back and forth, and the sun shone. But that pastoral scene hardly shielded a troubled world beyond, and one that is weighing on the US alliance.

In the age of Donald Trump and “Trumpism” – defined by its unpredictability – Pence’s mission was to reassure an alliance partner the US remained committed to an Asia-Pacific presence, and America’s relationship with Australia in particular. Pence put it this way:

I trust that my visit here today on my very first trip the Asia-Pacific as vice-president of the United States and the president’s plans to travel to this region this fall are a strong sign of our enduring commitment to the historic alliance between the people of the United States of America and the people of Australia.

Importantly, from Turnbull’s perspective, Pence put his imprimatur on a refugee deal that would see asylum seekers on Nauru and Manus Island resettled in the US subject to severe vetting.

The plain vanilla former Indiana governor and long-term congressman – polar opposite of the flamboyant Trump – did a reasonable job in his efforts to calm concerns that might be held about a new administration’s commitment to the region.

His message was similar to those delivered on previous stops in Japan and South Korea. America would stay the course, and it would stand with its allies against threats to regional security. If anything, it would act more assertively in seeking to preserve Asia-Pacific peace and stability.

Pence made no reference to the previous administration’s “pivot” to Asia, or its commitment to broaden engagement in the region via diplomatic means. If there is a defining characteristic of the new White House in its early months, it is that the threatened projection of American power is back more overtly as a diplomatic tool.

Had former vice-president Joe Biden been standing on the Admiralty House lawns, his words of reassurance to an Asia-Pacific ally would not have been much different. But the context has shifted significantly – and so, too, has the rhetoric.

North Korea’s belligerence, its provocations, its prosecution of a potentially deadly game of bluff, its quirkiness, its threats to launch ballistic missiles against the west coast of the US and as far afield as Australia, all are hardly new. But what has changed are the players: or to put it more bluntly, one player in counterpoint to North Korean leader Kim Jong-un.

Trump’s arrival in the White House has added a new layer of unpredictability to a set of circumstances North Korea’s neighbours have lived with for many years – that country’s development of a nuclear weapons capability.

The world might regard Kim as a cartoonish figure. But the reality is that he presides over a country whose firepower could leave swathes of the Korean peninsula in ruins.

More than half-a-century after the end of the Korean war, the Korean peninsula remains on a hair trigger. The South Korean capital, Seoul, is in split-second range of the north’s artillery and missile batteries.

If a response to Syria’s use of chemical weapons against its own citizens provided the first significant foreign policy challenge for a new administration, North Korea’s bombast represents a test of a different order.

No responsible public official can afford to ignore such threats, whatever judgements might be made about that country’s endless displays of brinkmanship.

Speaking of brinkmanship, America’s allies would be foolish not to recalibrate their own expectations of American behaviour under a Trump administration. In this regard Australia is – or should be – no exception.

While Turnbull might have emphasised his fealty to the alliance, the reality is that the Asia-Pacific – or as Australian officials emphasise these days, the Indo-Pacific (to include India and the Indian Ocean that laps at our shores) – has to accept that regional security increasingly will depend on Chinese engagement, whether we like it or not.

Both Turnbull and Pence made it clear they were looking to Beijing to help lessen tensions on the Korean peninsula and bring North Korea to heel. China has proved reluctant to assert its influence over its neighbour, but indications now are the Chinese accept that it is in their interests to calm the situation.

China has taken several significant steps to put Pyongyang on notice, including turning back coal shipments.

If Chinese and US pressure proves able to calm current tensions – and even bring about a freeze on North Korea’s nuclear ambitions – this may come to be regarded as an historic moment in regional security. It may also be a possible forerunner to the development of more formalised regional security arrangements.

American media reported that Pence’s visit to Australia and other regional countries was prompted partly by concerns in Washington that relations needed to be smoothed to combat reservations about the Trump administration’s commitment to the region.

Trump’s decision to pull the US out of the Trans-Pacific Partnership agreement, his criticisms of China so-called “currency manipulation”, his threats to launch a trade war with China, his description of efforts to combat global warming as a “Chinese hoax”, and other intemperate statements have rattled traditional allies.

If the American embassy in Canberra had been paying attention to local media it would have reported back to Washington that there is a groundswell of opinion in Australia that would like to see the country reposition itself between its traditional ally and its most important economic partner.

Influential voices, including those of former foreign minister Gareth Evans, have been calling for less “reflexive” support for US policies. Opinion polls indicate the majority of Australians have a poor regard for Trump.

Whatever Pence and Turnbull may have said on that sun-filled day on the shores of Sydney Harbour, the world is changing fast and with it the context within which Australia interacts with its security guarantor. And perhaps just as importantly, with its principal economic partner.

Tony Walker, Adjunct Professor, School of Communications, La Trobe University

This article was originally published on The Conversation. Read the original article.

How a more divided Turkey could change the way we think about Gallipoli


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Recep Tayyip Erdoğan has been a central figure in linking the Gallipoli campaign with Islamic conceptualisations of the Turkish nation.
EPA

Brad West, University of South Australia and Ayhan Aktar, Istanbul Bilgi University

The win for the “yes” side in Turkey’s recent referendum on the powers of the president has fundamental implications for parliamentary democracy in the country, and for relations between Turkey and the west. The Conversation

For Australia, the referendum has an additional significance: by entrenching the power of Turkish President Recep Tayyip Erdoğan, it will influence the future of Australian commemoration activities at Gallipoli.

The numbers of Australians, along with other westerners, visiting Turkey has recently declined dramatically. This is a consequence of ongoing political instability in the country following last year’s attempted coup d’état and a series of terror attacks. The Australian government also recently warned of potential attacks targeting the Gallipoli battlefields on Anzac Day.

A significant decline in this pilgrimage activity will likely have a wider impact on the way Australia understands Gallipoli. This is particularly the case given the continued resonance of an Anzac narrative characterised by a historical empathy for Turkey’s perspective on the war.

Links with political Islam

The Gallipoli campaign has, in recent years, become part of the culture wars in Turkey associated with the rise of political Islam. This has seen Gallipoli increasingly referred to in relation to an Islamic jihad, and as an invasion of crusaders into the house of Islam.

Approximately 1 million Turks visit the battlefields each year. And an estimated 10% of the Turkish population have at some stage engaged in some kind of martyr tourism at Gallipoli.

Erdoğan has been a central figure in linking the Gallipoli campaign with Islamic conceptualisations of the Turkish nation. He has said:

[The] crusades were not [finished] nine centuries ago in the past! Do not forget, [the] Gallipoli [campaign] was a crusade.

Following the failed coup, Erdoğan also evoked the memory of Gallipoli. Recreated scenes of the Ottoman victory in the land battles against Anzac soldiers played on large screens in Taksim Square as he addressed cheering pro-government crowds.

The vision was taken from a controversial TV commercial originally produced for the centennial commemorations of the Gallipoli battle. Its use of various Islamic symbols was widely interpreted as breaking with traditional secular ways of remembering the campaign.

A Centennial Epic: Çanakkale.

How the shift is taking place

Significant shifts in Turkish memory of Gallipoli are not unprecedented. Since the 1930s there has been a few turning points in how the campaign is understood.

First, and most significant, was the victory of the Ottoman Imperial Army in being “Turkified”. Arab, Kurdish, Greek, Armenian and Jewish soldiers and officers were cleansed from the official narrative. This also involved de-emphasising Germany’s role as the Ottomans’ allies in the first world war.

The official nationalist narrative has glorified the military leadership of Colonel Mustafa Kemal (later Atatürk) in the battles against British and Anzac forces. This has linked the collective memory of Gallipoli with the independence movement that led to the formation of the secularist Turkish nation-state in 1923.

The historiography of Gallipoli is now potentially undergoing another major change. The classical Turkish view of Gallipoli may be being replaced by an Islamic-oriented narrative.

Turkish pilgrims once were told the same historical tales by the guides that also took Australian and New Zealand visitors around the battlefields. But now, the vast majority of locals visit through bus tours that are arranged by Islamist municipal administrations for their residents, free of charge.

In contrast to local guides embedded in the tourism industry, those who lead the bus tours are more likely to express an Islamic narrative of Gallipoli.

This trend is apparent in an increasing popular march that re-enacts the mobilisation of the legendary 57th Regiment to defend the highlands from Anzac troops. This involves approximately 20,000 young boys and girls from scouts and other paramilitary organisations. And it is common for participants to wear t-shirts remembering their ancestors who fought at Gallipoli.

It’s hard to know precisely what the consequences of these new commemorative rituals will be for the collective memory of Gallipoli. From fieldwork research on the Anzac pilgrimage, the motivations and meanings taken away from the battlefields are often different from that which politicians and social commentators have often assumed.

Brad West, Associate Professor, School of Communication, International Studies and Languages, University of South Australia and Ayhan Aktar, Chair Professor, Istanbul Bilgi University

This article was originally published on The Conversation. Read the original article.

Imposing GST on low-value imports doesn’t level the playing field


Kathrin Bain, UNSW

The government wants to extend GST to imported online goods under A$1000, effective from 1 July 2017, with Treasurer Scott Morrison stating it will “establish a level playing field for our domestic retailers”. But the proposed legislation doesn’t do this. Rather, it unfairly imposes GST on goods purchased from overseas sellers, that wouldn’t be subject to GST if purchased from an Australian seller. The Conversation

The government also hasn’t cleared up how the collection will be adequately enforced. Without appropriate enforcement, collecting more revenue from this tax seems unlikely.

Currently, low-value imports (those with a customs value of A$1,000 or less) are exempt from GST. If the legislation is passed, overseas vendors who sell more than A$75,000 of low-value goods to Australian consumers would be required to register for GST, and collect and remit GST on low-value goods to the ATO.

Those imports will continue to be stopped at the border with any GST, customs duty, and associated fees paid to Australian Border Force by the importer before the goods are released.

For sellers of low-value goods it will mean that an overseas supplier of both low and high value goods will be subject to two separate tax regimes. The requirement to collect GST will apply only to low-value goods.

Online marketplaces and mail forwarding services

The new law will also apply to online marketplaces such as eBay and “redeliverers” – businesses that forward goods to Australia from overseas companies. For goods purchased through an online marketplace, the marketplace rather than the seller will be treated as the supplier. Similarly, if low-value goods are delivered to Australia by a redeliverer, they will be considered to be the supplier for GST purposes.

While extending the GST to these goods is meant to level the playing field between overseas and Australian vendors, treating the online marketplace or mail forwarder as the supplier of goods is inconsistent with the treatment of domestic transactions.

As eBay has stated in their submission to the Senate Committee: “eBay is not a seller. eBay is a third-party online marketplace that simply connects buyers and sellers”.

For Australian vendors who sell items on eBay, it’s the individual seller who is responsible for collecting and remitting GST on products they sell (if they are required to be registered). A seller who uses eBay, but isn’t carrying on an enterprise or does not meet the A$75,000 turnover threshold, isn’t required to be registered and would not be required to collect GST on their sales.

However, the proposed legislation does not treat overseas vendors in this way, by treating online marketplaces and mail forwarding services as the supplier of goods. The Treasurer stated that:

Including online marketplaces ensures that only a limited number of entities need to collect the GST, rather than the multitude of small, individual vendors making supplies through these online marketplaces that compete with Australian retailers here in Australia.

With all due respect to Scott Morrison, he seems to have missed the point that small, individual vendors should not (if their turnover of low-value goods into Australia is less than A$75,000) be required to collect GST merely because they use an online marketplace.

EBay has gone as far as stating in their submission that: “Regrettably, the Government’s legislation may force eBay to prevent Australians from buying from foreign sellers”. This is because they would not be able to comply with the requirements imposed under the new legislation.

Compliance concerns

Despite the legislation being intended to come into effect on 1 July of this year, it is still unclear how the new system will be adequately enforced.

At the moment, information displayed on international mail declarations doesn’t indicate whether the overseas supplier is registered (or required to be registered) for GST. It also doesnt say whether GST has been collected, and whether it is being correctly remitted to the ATO. Even if this information was readily available, it’s not clear how the ATO would deal with non-compliant entities.

If it was determined that GST had not been charged and collected by the overseas supplier of the low-value goods, there is nothing in the proposed legislation that would allow the GST to be collected from the importer (instead of the supplier) when the goods enter Australia. However, attempting to enforce an Australian tax debt against a non-compliant overseas vendor would be a complex, costly, and likely fruitless endeavour.

Consumer advocate group Choice has expressed concern that the government would use powers under the Telecommunications Act to block the websites of non-compliant entities. However, Scott Morrison has indicated that the government has no intention of using this power.

Concerns regarding enforcement have been echoed in a number of submissions, including the Taxation Institute of Australia and Amazon. Both highlight the fact that lack of enforcement may simply encourage Australian consumers to purchase goods from non-compliant overseas entities that are not charging GST.

By treating online marketplaces and mail forwarding services as the supplier of goods, the proposed legislation does not treat overseas vendors in the same way as domestic vendors. The tax will only be effective if the system for collecting GST on imports can be adequately enforced. Without appropriate enforcement, high levels of compliance seems unlikely. A lack of compliance will continue to leave Australian retailers at a disadvantage, with only minimal increase in GST revenue.

Kathrin Bain, Lecturer, School of Taxation & Business Law, UNSW

This article was originally published on The Conversation. Read the original article.

Trump and North Korea: military action will be a disaster, so a more patient, thoughtful solution is required



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North Koreans react as they march past the stand with North Korean leader Kim Jong-un during a military parade.
Reuters/Damir Sagolj

Benjamin Habib, La Trobe University

Pundits often cite the North Korean regime’s crimes against its citizens as proof of Kim Jong-un’s irrationality as a leader. These crimes, as exhaustively documented by former High Court justice Michael Kirby for the UN Human Rights Council, are monstrous and inexcusable. The Conversation

Grave as they are, they do follow a discernible logic from the perspective of Kim’s efforts to consolidate his regime’s hold on power. Perversely, US President Donald Trump’s sabre-rattling plays into Kim’s logic of domestic power that positions the US as a dire threat, justifying the regime’s political repression.

William Perry, US under secretary of state during the Clinton administration, has contended that Trump’s military brinkmanship increases the likelihood of coercing North Korea back to denuclearisation negotiations. This is the ground that a heightened threat of American attack will prompt Kim to recalculate the benefits of continued nuclear proliferation.

But this scenario is only credible if Trump intends following through on the threat. This now appears more questionable given the controversy over the exact location of the USS Carl Vinson.

Having established the foolishness of attacking North Korea in my previous article, I’d now like to prompt discussion on a couple of points.

The first is how the “irrational Kim” rhetoric limits our ability to understand the complexity of the crisis in North Korea. This creates risks that perversely would compromise human rights and humanitarian goals.

The second is to explore other options for improving human rights and humanitarian outcomes for North Koreans beyond the threat and application of military force.

There is much emotion in debates over North Korea, and rightly so. Many North Korenas have experienced much suffering and trauma, as well as the lingering anguish of the Korean War and the separation of families by the partition of Korea.

This is precisely why analysts need to carefully weigh up the risks and rewards of policy choices: to do justice to that suffering, and to ensure we do not recommend misadventures that could add further misery to the North Korean people.

First, don’t make things worse

Considering the risks to civilians posed by a war of regime change, it is difficult to mount a case for war as a vehicle for improving human rights and humanitarian outcomes for the North Korean people.

The discourse on human rights in North Korea has long been framed through the lens of national security. Policy issues become “securitised” when proponents of an issue area frame it as an existential security threat, of high priority, that requires extraordinary measures and rapid action to tackle.

Because such issues become framed in the language of security, military-based solutions often come to dominate policy prescriptions. The “crazy Kim” argument has been central to the security rhetoric around human rights in North Korea. This locks possible solutions into a narrow spectrum focused on military force and coercion.

Just as doctors undertake to “first do no harm”, so too should foreign-policy-makers be wary of strategic choices that carry a high risk of making things worse.

Many Korea analysts have pointed to Seoul’s vulnerability, and the risk to millions of South Koreans, posed by a cascading escalation of US military action into full-scale war. That risk also applies to people living in population centres north of the demilitarised zone.

As the Iraq example again illustrates, removing a dictator in a war of regime change is not a guarantee that human rights and humanitarian outcomes will improve.

According to the Iraq Body Count project, 119,915 Iraqi deaths were verifiably attributed to the conflict in that country from 2003 to 2011. Another study published in PLOS Medicine journal put the death toll at half-a-million Iraqi civilians.

Either way, this death toll and suffering escalated well beyond the scale of human rights abuses and deaths that occurred under Saddam Hussein’s regime. This is not to downplay the suffering of those persecuted under Hussein, but to recognise that the invasion of Iraq made a bad situation worse.

Could we see similar casualty numbers in a war in North Korea?

North Korea is an urbanised country. Approximately 60% of people are concentrated in larger urban centres. In the event of full-scale escalation, air strikes are likely to target critical infrastructure in an effort to weaken the fighting and logistical capacity of the Kim regime. Many of these targets will be in urban centres, exposing civilians to attack.

We should be mindful of the humanitarian cost of the damage of war to the North Korean economy, industry, agriculture and key infrastructure. Targeting of critical energy, transportation and sanitation infrastructure will no doubt weaken North Korea’s fighting capacity, but also eliminate those critical services for civilians. Food production and distribution networks are likely to be disrupted.

For a country that is already chronically food insecure, any damage to food production and distribution systems will have immediate impacts on increasing malnutrition and starvation. Consider that estimates of deaths from North Korea’s “Arduous March” famine in the mid-1990s sit at approximately 600,000 after the collapse of the country’s food production and distribution system.

The elimination of services for civilians is likely to increase the risk of non-combat casualties from malnutrition, disease, and the elements – particularly during North Korea’s harsh winter.

If such a war ends quickly and an occupation force arrives in North Korea to restore security, casualty figures will be still be high. However, some of the longer-term impacts of human insecurity might be avoided.

However, in the event the post-regime environment is unstable, then casualty figures for North Koreans on a scale similar to Iraq become more likely.

Creating an environment for positive human rights outcomes

Removing Kim Jong-un as the head of the regime does not automatically translate into a win for human rights. A lot of post-conflict nation-building has to take place if a war scenario is to transcend the immediate humanitarian disaster and create an environment in which human rights for the North Korean people can be improved.

Human rights are best guaranteed by stable governance, strong political institutions, legal protections, active civil society, and broad material wellbeing. A post-conflict North Korea in which the Kim regime has been removed would effectively be a failed state. None of these facilitating conditions for human rights guarantees would yet exist.

It takes time and resources to cultivate the institutions of a stable state. It requires many years of patient networking, conversation and compromise to develop a social movement that could evolve into an active civil society. It takes even longer to cultivate a political culture in which the citizenry respects the integrity of the political system even when their faction is not in power.

Without this social infrastructure, Kim Jong-un’s removal is likely to lead to the disintegration of North Korea into a failed state, paving the way for the emergence of another authoritarian strongman.

In South Korea, it took more than 40 years after the conclusion of the Korean War, an ongoing American military occupation, and the development of a broad-based pro-democracy movement, for an imperfect democratic political system to evolve.

To suggest this process could be circumvented in North Korea does not accord with the findings of research into democratisation and social movements. These norms, rules and institutions should ideally be developed by the North Korean people over time, not impatiently imposed from outside by other powers.

It is doubtful that Trump – and, more importantly, his core political support base – has the stomach for the massive long-term, high-cost commitment that nation-building in a post-Kim North Korea would entail.

Where to from here?

One could be forgiven for observing the current US-North Korea standoff as a game played by privileged men in suits on either side, gambling with the lives of ordinary citizens. Millions of lives on both sides of the demilitarised zone and beyond are placed at unnecessary risk through such high-stakes brinkmanship.

It is easy for leaders to talk tough on non-proliferation and human rights enforcement. But it is quite another to bring about international norms in these fields in such a tricky strategic context as the Korean Peninsula.

Unfortunately, Trump’s penchant for military posturing does little to increase the likelihood of denuclearising North Korea, or improving human rights outcomes for its citizens.

Instead, the Trump administration’s bellicose rhetoric inadvertently legitimises North Korea’s justifications for its nuclear weapons program, along with the domestic coercive apparatus that persecutes North Korean citizens.

Guaranteeing human rights in North Korea will ultimately require new institutions, new laws, a domestic civil society, cultural change, and a process of justice for past abuses.

This is a project far beyond the scope of military action, requiring patience, innovative thinking and disciplined strategic restraint on the part of policymakers. And they must recognise the unique strategic circumstances of the Korean Peninsula.

Benjamin Habib, Lecturer, School of Social Sciences, La Trobe University

This article was originally published on The Conversation. Read the original article.

Five tips to get the most out of your workday


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Drinking coffee at work has a range of benefits.
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Mary Barrett, University of Wollongong

Getting a lot done each day is about more than just having the right productivity tools and setup. It’s about taking care of your body and mind, and this starts even outside of the workplace. The Conversation

We all need strategies for increasing productivity; here are five to get you started.

1) Get a good night’s rest

The first key to productivity is plenty of sleep. Getting 7-8 hours sleep a night will flow through into your work, from sharper decision making and problem solving, to better coping with change.

It is not just the quantity of sleep that matters, but quality as well. You should try to stick to a regular sleep pattern.

Going to bed late during the working week and hoping to catch up with a sleep-in on the weekends may make you feel more productive, but you are disrupting your sleep-wake rhythms. This makes it difficult to feel alert and ready for work on Monday.

Get into a good sleep routine by setting a regular bedtime. Then avoid caffeine, alcohol, nicotine, and other chemicals that interfere with sleep.

Limit light exposure – including from TV, phone and computer screens – in the evening. Eat, drink and exercise enough, but not too much and not too close to your bedtime. Make sure your bedroom is a calm place, and use it only for sleep and intimacy.

Shift workers may not be able to keep to a sleep routine, of course, and they need to be even more careful to get good sleep when they can.

2) Drink some coffee at work

Coffee helps you feel alert because it blocks adenosine, the main compound in your brain that makes you sleepy.

A study of US Navy SEALs found caffeine had a range of positive impacts beyond keeping you awake. Benefits ranged from increased alertness and reaction time, to improved learning, memory and even mood. The effects lasted from one to eight hours.

Another study found that caffeine speeds up how quickly we process words.

But coffee isn’t just effective on a chemical level.

Researchers at MIT found that scheduling coffee breaks so that the entire team took it at the same time increased productivity. When tested at a bank call centre, efficiency increased by 8% on average, and 20% for the worst performing teams. The benefit here came less from the caffeine and more from increasing the interactions between team members.

But before you rush out to grab a coffee, remember that in these experiments “a good cup of coffee” means black coffee. Research shows the levels of the beneficial antioxidants in coffee were higher and lasted longer in black coffee drinkers than for people who added sugar or non-dairy creamer to their coffee.

3) Take a break and do some exercise

Researchers in America have found that taking breaks during the workday is important for workers to replace workplace “resources” – energy, motivation, and concentration. These resources aren’t limitless, and periodically need “charging” by doing activities that require less effort or use different resources than normal work, or are just something the worker enjoys.

A break could be mean completely stopping work and doing something fun. An office-worker might go for a run, for instance. Or it could just mean switching tasks and doing something different, such as a supermarket shelver sitting down and doing paperwork.

The researchers also found it matters when you take your break. You will be most productive after a break if you take it early in the work day rather than later, when you are already tired.

But perhaps you should also carve out special times in the day for physical movement. Researchers in Sweden found that devoting some work time to physical activity increases productivity. The research found that as little as two and a half hours of physical activity a week led to more work being done in the same amount of time, and reduced absenteeism due to sickness.

4) Conquer procrastination

Procrastinating not only reduces your immediate productivity
by delaying work, but increases stress and lowers well-being. This can make your productivity even worse, later.

There are a range of relatively simple interventions you can do, such as eliminating notifications on your devices, only working for 15 minutes to get a project started, or creating smaller goals.

A classic remedy now supported by a University of Pennsylvania study is to divide tasks into smaller pieces so you can work through a more manageable series of assignments. Use the higher energy levels you have in the morning to do a small task you don’t feel like doing, such as phoning someone you have been reluctant to contact. You’ll give yourself the mood and energy boost that comes from a small achievement.

5) Do one thing at a time

Don’t be tempted to multitask. Our brains are not suited to dealing with multiple streams of information or doing multiple jobs at the same time. The more tasks we try to do simultaneously, the slower we complete them and the more mistakes we make.

Further, the research found that those who do multitask are more prone to becoming distracted by their environment.

By contrast, take that difficult phone call you just made. You gave it your full attention and finished it. Now, do something else important and then take a short coffee break, perhaps a walk. Your body and your mind will be in top gear and so will your productivity.

Mary Barrett, Professor of Management, University of Wollongong

This article was originally published on The Conversation. Read the original article.

Budget explainer: the federal-state battle for funding


Adam Webster, University of Oxford

There seems to be an ever present struggle for a share of the revenue government collects, not only between states but also between the different levels of government. The Conversation

In each year’s budget, the federal government allocates funds for federal programs (such as defence) and for some programs operated at a state level (such as school education, public transport, and hospitals). It has this role because it also collects more revenue from taxpayers than the states.

The reason for this all relates back to (at least in part) the Australian constitution.

The division of power between the federal and state governments

The federal parliament can only legislate (that is, make laws) in certain areas, known as “heads of power”, most of which are listed in sections 51 and 52 of the Constitution. This gives the federal parliament the power to legislate with respect to matters such as defence, external affairs, immigration, invalid and old-age pensions, and marriage.

In contrast, there is no equivalent limit on the legislative power of the states. The states may legislate in any area. However, section 109 of the constitution provides that where there is an inconsistency between a federal law and a state law, the federal law will prevail. In simple terms, this means that if the federal parliament has made a law dealing with a particular matter, state governments are unable to legislate in ways that conflict with the federal law.

The federal government’s control of revenue

The state and federal governments all have the power to collect tax, subject to some exceptions. Notably, section 90 of the Constitution gives the federal government exclusive power over the lucrative revenue streams of customs and excise duties (taxes on goods, such as alcohol, tobacco and fuel).

Until the Second World War, Australians paid income tax to both state and federal governments. However since 1942, the federal government has been the sole collector of income tax.

The federal government has also collected company tax for over 100 years, and the GST since 2000. The states could still collect income tax if they wanted to, but choose not to for political reasons.

Prime Minister Malcolm Turnbull tried to explore the possibility last year of both the federal and state governments collecting income tax, but this was quickly rejected by the states. While the states generate some revenue – for example through gambling, property and payroll taxes and mining royalties – they are unable to collect anywhere near the same amount as the federal government.

This creates a “vertical fiscal imbalance” between the federal and state governments. Conversely, the federal government is in the opposite position: while the federal government collects extensive revenue, its power to spend and directly fund programs is more limited.



The Conversation, CC BY-ND

Testing the government’s power to spend on certain programs

Until recently, the federal government thought it could spend money more or less as it pleased. However, the High Court clarified and restricted the federal government’s power to spend money and limited its ability to fund directly some programs.

Its power to spend was tested in 2012 and 2014 in two legal challenges to the government’s funding of the national school chaplaincy program. Prior to the legal challenges, the federal government had entered into agreements with religious service organisations – such as Scripture Union Queensland – to provide chaplains in schools.

The High Court held that (with some small exceptions) the federal government’s power to spend money is limited to where the authority to spend money is expressly conferred by legislation. The legislation authorising the spending must also be supported by one of the “heads of power” granted to the federal parliament by the constitution.

In the case of the chaplaincy program, the court rejected the arguments that the legislation could be supported by the power in one section of the Constitution to make laws for the “provision of…benefits to students” or by the corporations power in another section of the Constitution. To continue the funding of the national school chaplaincy program the federal government turned to the states for assistance.

How the federal government gives money to the states

Section 96 of the Constitution provides for the federal government to provide a significant proportion of its revenue to the states:

…the Parliament may grant financial assistance to any State on such terms and conditions as the Parliament thinks fit.

This distribution of revenue takes two forms – general revenue assistance (“untied funding”) and payments for a specific purpose (“tied funding”).

The untied funding that states receive from the federal government is largely made up of the money that the federal government collects from the GST. The states can spend this money as they see fit.

However, the passing on of the GST revenue is not unconditional. It’s conditional on the states giving up the collection of a number a number of states taxes.

The complex task of carving up the GST revenue between the states is left to the Commonwealth Grants Commission. The annual process always seems to leave a least one state claiming it should receive a greater share of the pie.

The federal government may also provide funding to the states for a specific purpose. The states have to consent to receiving the funding (which is not usually a problem), but it does mean that the federal government cannot impose programs on the states that they vehemently oppose.

This funding is tied to a particular project, where the federal government provides the funds and the state carries out the project. Grants such as these have been used regularly to fund education and health projects in the states. These specific purpose grants may be conditional on states meeting regular reporting requirements or achieving certain milestones.

Providing funding to the states through specific purpose grants allows the federal government to have great influence on policy areas that have traditionally been within the purview of the states.

The federal system of government created by the constitution divides power between the federal and state governments. While at times this might seem inefficient, it also provides checks and balances on government spending.

Adam Webster, Departmental Lecturer in Law and Public Policy, Blavatnik School of Government, University of Oxford

This article was originally published on The Conversation. Read the original article.

Turnbull talks tough on foreign workers – deer farmers and historians off welcome list


Michelle Grattan, University of Canberra

Whatever the arguments for the changes governing foreign skilled workers announced by Malcolm Turnbull, make no mistake – this is about an embattled government wanting to send a strong political message. The Conversation

One clue was Turnbull’s reference to placing first not just Australian jobs, but “Australian values”. He made mention of “Australian values” both in his Facebook video and his news conference, when announcing the replacement of the 457 visa.

In this context, “Australian values” is itself a value-laden term.

For Turnbull, it was something of a rhetorical juggle, as he acknowledged Australia as an “immigration nation” and noted the many workers “from war-shattered Europe” who helped build the Snowy scheme, while declaring Australian jobs must be filled by Australians wherever possible.

The government has been under pressure over foreign workers from left and right – from Labor (Bill Shorten introduced a private member’s bill to tighten the 457 scheme), as well as from One Nation.

Pauline Hanson was – of course – quick to claim credit for Turnbull’s move.

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A few years ago another federal government on the defensive went to a like place. In 2013, Julia Gillard pledged to “stop foreign workers being put at the front of the queue with Australian workers at the back”.

Labor sources at the time said she was tapping into what they described as the “economic patriotism” embedded in the “battler” view of the world; Labor research had found a strong view among voters that there were available jobs Australians couldn’t get. Attitudes are unlikely to have changed, and the Turnbull government knows it.

For the record, in response to Gillard then-opposition leader Tony Abbott defended the 457 entrants and accused her of “trying to divide Australians”.

It’s unclear precisely how much difference the Turnbull government’s change – cast to sound dramatic but seen by some as mainly a rebadging – will make.

It is scrapping the 457 visa, under which foreign workers are brought in on four-year visas. It will be replaced by a new Temporary Skill Shortage Visa program with two streams. One will provide a two-year visa; the other, a visa for up to four years.

The list of requirements will include applicants having at least two years work experience in their skilled occupation; mandatory criminal history checks; and the capacity for just one on-shore renewal under the short-term stream. The short-term stream won’t provide a path to permanent residency. There will be tightened English language requirements for the medium-term stream.

The government has given no estimate of the expected outcome of the change.

Turnbull said that at present there were about 95,000 457 visa holders. But he could not quantify the likely impact of the new system beyond saying: “Because we are narrowing significantly the number of occupations and we are increasing the qualifications that visa applicants need to have, it is our expectation that all other things being equal you will see a material reduction over time of people working on these temporary visas.”

But “it depends upon all other things being equal … which they are not. It depends on the demands of the economy, emerging skill gaps, changes in the economy.”

It’s worth remembering that 457 visa workers are less than 1% of the workforce.

The present list of 651 eligible occupations has been cut by 216, to 435. Some 268 occupations will be available under the new two-year visa, and only 167 will be eligible for the four-year visa.

The occupations chopped range widely, including jobs as diverse as deer farmer, project builder, betting agency manager, chemical engineer, horse trainer, singer, antique dealer, and bed and breakfast operator.

It’s not clear precisely how judgements were made on some of them, such as commissioned police officer, policy analyst, television presenter, and archivist.

Some of the deletions – such as “historian” and “archaeologist” – are hardly jobs to which an “Australians first” rule should apply. Nor will their exclusion from the list have much impact on the Aussie labour market.

Then again, much of this is definitional. Quite a lot of the deleted occupations could be re-classified to come within the revised lists.

Indeed, Jenny Lambert, from the Australian Chamber of Commerce and Industry, pointed out that the 457s were “rarely if ever” applied to many of the deleted occupations. She suggested that the problem with 457s has been one of public perception rather than the scheme’s operation. “The perception of the program is the biggest issue and we need to reset it,” she told Sky.

The Australian Industry Group’s Innes Willox said that “the 457 visa system was a highly valued program but misunderstandings of its use and exaggerations of its misuse led it to become a lightning rod for anti-migration sentiments”.

Supporting the reforms, Willox said: “The temporary skilled visa program should now be considered as settled without the need for further reviews and disruptive policy change”.

In other words, business’ main preoccupation is that the importation of foreign skilled workers should be taken off the political football field.

That may be wishful thinking. Meanwhile, eyes will be on whether the government puts any squeeze in the budget on the general immigration program, which has been coming under attack from some critics in a housing affordability debate that’s run increasingly out of the government’s control.

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Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.